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Competition Bureau supports CRTC’s changes to wholesale code

May 4, 2015 — OTTAWA, ON — Competition Bureau

The prices paid by television service providers to channel owners to distribute their programming should be closely monitored by the Canadian Radio-television and Telecommunications Commission (CRTC) to ensure greater competition and increased choice and flexibility for consumers, the Competition Bureau says.

The Bureau today provided its submission in response to the CRTC’s consultation on a Wholesale Code to govern the commercial arrangements between television service providers—cable and satellite companies—and television channel owners.

The Bureau’s submission focuses on the use of a sliding-scale of prices that a television service provider pays to a channel owner in order to carry a particular channel. The price can vary significantly depending on the number of channel subscribers, with per-subscriber prices typically decreasing as the channel’s viewership increases. These types of price schedules can give television service providers an incentive to bundle channels together to increase subscriber penetration for all channels in the bundle, rather than offering more choice—the result being that consumers may pay for channels they may not want.

The Bureau’s submission advocates that these so-called "penetration-based rate cards" (PBRCs) need to be kept in check by the CRTC to ensure that television service providers are able to offer increased choice to their customers. The Bureau’s view is that the code proposed by the CRTC benefits consumers by encouraging greater competition and providing increased choice and flexibility in how consumers view and obtain content.

The CRTC recently announced that by the end of 2016, viewers will be able to supplement an affordable entry-level service with the additional channels they want, either on a pick-and-pay basis or in small, reasonably-priced bundles.

To ensure this choice is available to consumers, the CRTC sought comments on a code of conduct for broadcasters and television service providers that clarifies the terms and conditions under which wholesale agreements between the two are struck.